An example of the future trends can be seen by the retailing of Tesla and Apple which, said architect Justin Morris, show the move to shop retail sites and to high-quality presentation and packaging respectively.
Mr Morris, a director of Ardent Architects that specialises in designing automotive dealerships, said Tesla is one of the first to significantly break the mold of how vehicles are sold by moving from the traditional dealership model to the shop retailing model.
“The old adage in automotive was the importance of ‘people, product and premises’ in that order,” he said.
“This still holds true, however the expectations of the customer’s requirements and experience in a dealership are changing. Retailing of vehicles is following trends set by companies like Apple, and encompasses what experience the customer has in the premises and the process of purchasing, taking delivery of and servicing their vehicle.
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“From purchasing through to trading in a vehicle, a customer will spend anywhere up to 100 times more than the time spent on their iPhone purchase. It stands to reason that they would expect an experience at least as special and memorable.”
Mr Morris said because of this, the traditional dealership model may not be the way to go for the future.
“Most new dealerships, especially ones in metro PMAs, face the issue of escalating land prices,” he said.
“This results in requiring a facility that can deliver more volume than ever before on substantially less land than might have been feasible to acquire previously. This squeeze on land size, coupled with franchises increasing customer amenity requirements leads to requiring a change in thinking around the master planning of dealerships.
“The days of sales people’s desks on the floor, instant coffee and old advertising posters stuck around the showroom are outdated.
“Modern dealerships are moving towards a showroom model where offices and associated administration are not in the customer space providing more of a retail feel to the facilities.”
Mr Morris said another contributing factor is the Building Code of Australia’s tightened energy consumption requirements for commercial buildings.
“As showroom glazing is the single highest factor in heat gain and heat loss in dealerships, we are having to come up with creative ways to still provide the dominating glazed showroom that the franchises require while meeting the Building Code of Australia,” he said.
“Undercroft parking beneath the showroom is featuring more heavily in current dealerships as it has a number of advantages. It allows for many additional car spots and doubles the use of the land with the showroom above.
“Undercroft parking also provides secure weatherproof parking for stock with an economical build cost. Undercrofts, unlike basements, are only half underground the other half is achieved by raising the showroom.
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“This split makes the undercroft cheaper to build while displaying the showroom cars above the roofs of the external new car display which typically obscures vision into the showroom.”
Another change is for used cars, which traditionally were sold from a large stock at the front of the dealership. Used cars were not normally the focus, he said.
“Now, the majority of used cars are being researched online by buyers,” Mr Morris said.
“This means dealers can move away from having to present used cars on prime real estate.
“Roof top display of used cars is becoming more common as it makes use of space above the dealership and provides space for vehicles that are infrequently moved as compared to say a service customer car or a new demonstrator.”
Mr Morris said that dealers should look at the Tesla model for the future of retailing. In particular, it was Tesla’s move from a pop-up location in a Melbourne shopping centre to their own tenancy in the boutique section that shows the way forward.
Mr Morris said that move highlights a number of significant differences in the sales experience at a Tesla showroom.
- The showroom is very clean, simple and elegant. Large format graphics cover the walls with a simple brand message clearly explaining the product and the company. The brand message is clear, up to date and relevant to the product adjoining it.
- All material and color options are displayed to provide the ability for customers to touch and feel any options.
- There are only a couple of cars in the showroom.
- There are no offices or receptionist and there is no need for a customer lounge.
- A staff member who is a product specialist greets the customer and is there to answer questions and show the customer the vehicle features.
- If a customer expresses an interest to test drive or buy a vehicle they are then introduced to a sales consultant. This is highly efficient as the sales persons time isn’t taken up with tyre kickers and the customer feels more comfortable being taken through a product by someone who isn’t trying to sell to them.
- The salesperson would also organizes all the aftermarket and financing with the customer so it is a one on one sales experience.
- If the customer is comfortable in ordering online they can complete the entire sales process on the internet.
- Tesla are very upfront with the pricing and will answer plainly, as per any other retail purchase, what the actual cost of the vehicle is.
- The whole experience of their showroom exudes a quality, premium product feel while being an incredibly inexpensive fit out compared to typical new car showrooms.
Tesla Chadstone
Mr Morris’ said he sees future trends in dealerships as including:
- A regular shop sized tenancy in a shopping center for new vehicle sales with multiple brands who have interconnected tenancies side by side.
- Premium brands would be located with the premium retail stores while mass brands would be looking to locate next to high traffic stores such as supermarkets.
- Other models and demonstrators in the shopping centers car park in prominent positions near pedestrian entrances.
- Express service center in shopping centers basement or back of house area. A second service location in the PMA may be considered adjacent to major public transport hubs.
- Used cars becomes a separate business, potentially in a warehouse in a cost effective industrial area.
“In this future model of retailing, vast tracts of land displaying dozens of the same vehicle would not be required,” he said.
“The showroom is a retail shop in a shopping center or shopping strip containing only a couple of vehicles, typically the biggest sellers to that demographic.
“Aside from the location and reduced special requirements around how new vehicles may be sold there needs to be a mind shift in servicing.
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“Express servicing could become the norm and much like car detailing services proliferating the car parks of Australia’s shopping centers one could drop their car off for servicing and pick it up after having done the weekly shopping.
“Some larger vehicle retailers have started treating used cars as a separate business on a separate site.
“With the vast majority of used car inquiries coming from online the need for massive used car lots on premium main road street frontage is becoming a thing of the past.
“If Tesla’s model is the way forward of the future, it could dramatically decrease the capital investment required to simply sell and service cars.
“If a tenancy in a shopping center could sell 100 cars a month with two shop assistants and a sales manager it would suggest a very different financial model to the current dealership model.”
By Neil Dowling
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